Spark lifts first-half profit 9%, special dividends possible in 2017

Thursday 18th February 2016

Spark New Zealand, the country's biggest telecommunications company, lifted first-half profit 9 percent as its mobile and broadband businesses offset declines in its fixed line units and said it wants to keep paying special dividends next year.

Net profit rose to $158 million, or 9 cents per share, in the six months ended Dec. 31, from $145 million, or 8 cents, a year earlier, the Auckland-based company said in a statement. Earnings before interest tax, depreciation and amortisation gained 4.3 percent percent to $455 million, as revenue fell 4.1 percent to $1.72 billion. Forsyth Barr analyst Blair Galpin expected Ebitda of $490 million on sales of $1.71 billion.

The board affirmed plans to pay 22 cents per share in dividends this year plus special dividend payments of 3 cents, and anticipates it can continue those extra payments into 2017. It declared an interim dividend of 11 cents and special dividend of 1.5 cents, payable on April 1, with a March 18 record date.

"For shareholders, we remain pleased with the continued underlying improvement in free cash flow and the improving financial performance of the business," chairman Mark Verbiest said. "We anticipate the special dividends could continue into FY17 subject to no significant business changes."

Spark has hiked prices for copper-based broadband services after the Commerce Commission delivered a smaller reduction in the regulated price network operator Chorus could charge its customers than initially proposed.

The company affirmed guidance for Ebitda to rise up to 3 percent in the 2016 financial year.

The shares last traded at $3.205 and have fallen 2.9 percent this year, less than the 3.9 percent decline in the S&P/NZX All Index over the same period. The stock is rated an average 'hold' by eight analyst recommendations compiled by Reuters, with a median target price of $3.18.

BusinessDesk.co.nz

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